Inheritance tax: Will & everlasting energy of lawyer lower – act earlier than ‘it is too late’ | Private finance | Funds
Lasting Power of Attorney (LPA) is a legal document that allows a person known as a donor to appoint one or more people called attorneys to help them make decisions or make decisions on their behalf. This can affect financial decisions that can be important for a person’s later years, when they may succumb to certain debilitating conditions like dementia.
LPAs are important to estate and financial planning, but after an interruption in the application process during the pandemic, there has been a “significant decrease” in the numbers recorded last year.
Quilter, the financial advisory and wealth management firm, recently filed a request for information with the Department of Justice, showing that the number of LPAs registered between April 2020 and February 2021 fell by 30 percent compared to the same period last year.
Those numbers have been improving lately, but they still haven’t recovered to pre-pandemic levels.
Rachael Griffin, a tax and financial planning expert at Quilter, commented: “At the start of the pandemic, everyone was rushing to figure out how to keep providing services that previously required physical contact.
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“Things like getting a wet signature became problematic. For permanent power of attorney requests, it took the Guardian’s Office (OPG) about a month to develop guidelines for use in the Covid-19 environment.
“In addition, the OPG stated that there were numerous inquiries and that it was taking longer than usual to process applications. No wonder that registrations fell by 70.5 percent in April alone compared to the previous year.
“Although the numbers have still not returned to their previous levels, they are converging and it is encouraging to see people getting the valued attitude that an LPA brings.
“For those who were put off by the difficulty of registering an LPA at the beginning of the lockdown, or who haven’t had an opportunity to have a potentially difficult conversation, put the task on top of the task again. An LPA can only be registered if you have intellectual skills. Once you’ve lost capacity, it’s too late. “
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Rachael concluded by examining what this means for inheritance tax planning: “Establishing a permanent power of attorney (LPA) is a critical part of later planning.
“There are two types of LPA: Health and Welfare and Property and Financial Matters.
“A real estate and financial LPA enables the people you choose to help you with your finances when you lose mental faculties.
“You can make decisions about your property, investments, pensions, bank accounts, taxes, and bills. If you run out of capacity before you have time to put your assets in order.” For example, if you did not consider potential inheritance tax liabilities, then an LPA is crucial. Decisions can take some time as some must be brought before the court to be admitted. It is therefore recommended that you have an LPA in place and have clear instructions on how your estate should be handled.
“Without the LPA, things get a lot more complicated and time-consuming. Someone has to go to the court to determine whether you have the mental capacity to make a decision and, if necessary, appoint an alternate who can or can make decisions on your behalf not be the person you would have chosen. “
In addition, many seem to underestimate the importance of will-making for inheritance tax purposes.
Tower Street Finance recently surveyed 2,000 adults in the UK. The results showed that eight out of ten people say they plan to leave an inheritance to their loved ones, but nearly half leave it “to chance who exactly benefits and who doesn’t”.
The results show that 45 percent of adults in the UK said they did not write a will. 23 percent of people aged 55 and over and 47 percent of women do not have a will.
Even so, people showed that they have strong opinions about who should and who shouldn’t benefit from a legacy they leave behind when they die, as 61 percent of people want their children to benefit from an inheritance, while another 43 Percent wished to leave all of this to their partner or spouse.
This applies to those who want to leave their estate to a partner without a will in place. Only those who are married or have a civil partnership will grant their last wishes.
According to the rules of intestacy, if a person dies without a will, only married or civil partners and some close relatives such as children, siblings and grandparents can inherit an estate.
Cohabiting couples, now the second fastest growing type of household in the UK according to the ONS, have no rights under intestacy.
Andrew Bartle, founder and chief executive of inheritance specialist Tower Street Finance, commented: “Writing a will is one of the things we all know we have to do, but we’ve put it off.
“Nobody likes to think about their deaths, but as our survey shows, people have strong feelings about who should and should not receive an inheritance. So it is important that they clarify their final wishes in a will.”